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How do free apps make money?

In today’s world of smart devices, we download multiple apps on a regular basis, most of which are free. Many of the top grossing apps cost nothing to download. Whether it is Temple Run, Clash of Clans or tripadvisor, there are many top grossing apps on Android and iOS that are all free. Majority of users in the market expect the apps to be free. Now, do you know how the app developers recoup their expenses and profit?

App creators usually make money of their free apps by advertisements and in-app purchases. In order to make money from free apps, there is a lot to do than just sticking to ads or paid options in the app. There are many monetization strategies and familiarizing yourself with your market and competitors will help you to cater right user experience. It takes a lot of time and effort to create these apps. Here is what you need to know about how free apps make money.

1. Using advertisements

This is the most common method followed by developers to earn money from their free app. The idea is quite simple and easy. Companies promote their products and services through advertisements in different formats such as banners and pop-ups. The developers of the free app are paid based on the number of clicks, leads and impressions. However, the advertisements should pop-up without compromising the user experience. People may not like the apps with poor user experience and multiple ads. The most common advertising options are video ads, banner ads, interstitial ads, native ads, etc that help you monetize your free app.

2. Affiliate marketing

We often hear about affiliate marketing when it comes to earn through the internet. The same is applicable to mobile apps. One can earn from their free apps by using affiliate marketing strategies. Affiliate marketing is a popular business concept where the app creators will receive exciting commissions for every successful lead initiated through the app. It is also possible for people to promote products and services through built-in app store through pop-ups and banners.

3. Subscriptions

Subscription is another important monetization strategy when it comes to earn through free mobile apps. App creators and publishers may offer free content on their apps for a limited period and then charge the users for a subscription fee to access the content without any restriction. This tactic is used to convince the users to subscribe the app for a free trial period and charge the fee for those who wish to access the app.

4. Sponsorship

Mobile apps creators often look for sponsors, just like websites and other things. Many small and large companies have realized the importance of being promoted through mobile apps. As a result of which, they tend to invest their money in sponsoring mobile apps. Sponsorship can be provided in mobile apps in different ways. For instance, the name of the app can be changed to promote the sponsor. Sometimes, the app interface is changed to reflect the name of the sponsor or brand.

5. Selling products

Some free mobile apps make money by selling merchandise. The best example for this is ‘Angry Birds’ designed by ‘Rovio’. After the launch of Angry Birds, people started buying different types of Angry Birds merchandise. The merchandise is not restricted to a few products, but extended to a wide range of items such as – clothes, toys, home decor, apparels and many more.

6. Freemium strategy

Freemium apps are the most common forms of monetization that are available for free on the app stores. App creators can attract a wide range of users at a faster rate, as many users are reluctant about paying before they download. Freemium apps give the users a chance to try the app before committing to purchase. Users who wish to use the entire features can use in-app function, which is a very simple process. This is an interesting strategy, as it easily converts the non-paying customers to paying users.

7. Email marketing

Email marketing is a powerful strategy when it comes to monetizing apps. This strategy works by requesting the user’s email during login and eventually reaching them through emails. There are certain situations, where collecting all the data and storing in database may be helpful. For customers who haven’t used the app for long time, it is an easy way to reach them through email. Email marketing is no doubt the best way to reach customers.

8. Amazon underground

Amazon underground is relatively the best way to monetize apps. This methodology acts as a stand-alone store where neither in-app purchases nor ads are allowed. In case any app contains in-app purchases, the publishers may agree to wave off the fees before making them available for download. Users are able to access unlimited number of app without actually paying for them. This innovative strategy is very helpful for developers with apps that have average session length.
With so many alternatives available to monetize free app, it is important to note that each method has its own advantages and disadvantages. Thee app requisites, structure and target audience should be considered before choosing a strategy. To figure out the right monetization strategy for you app, you should do a market research, browse the app stores, check what successful developers are doing and find a right strategy.

If you have any queries about any of the above monetization strategies, feel free to contact us.

Rahul has been associated with the apps industry for more than 7 years now. He has seen the apps economy grow from its nascent days to a full fledged industry with its complete ecosystem as of today. His interest lies in pursuing and getting to know the best app development technologies, processes and platforms. He is truly an app enthusiast. In his free time he loves playing console games and reading history.

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Promatics is an ISO 9001:2008 certified offshore web and mobile application development company with a strong team of 100+ highly skilled IT experts delighting SMEs across USA, Europe and APAC. Our services and solutions help clients to achieve tangible business value and remain competitive in today’s evolving marketplaces.